Ayayai Incorporated leases a piece of equipment to Kingbird Corporation on January 1, 2020. The lease agreement called for annual rental payments of $5,443 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $27,600, a book value of $22,600, and both parties expect a residual value of $8,250 at the end of the lease term, though this amount is not guaranteed. Ayayai set the lease payments with the intent of earning a 4% return, and Kingbird is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

Prepare the lease amortization schedule(s) for Kingbird for all 4 years of the lease. (Round answers to 0 decimal places, e.g. 5,275.)

KINGBIRD CORPORATION Lease Amortization Schedule Annuity-Due Basis
Date		Annual Payment		Interest on Liability		Reduction of Lease Liability		Lease Liability
1/1/20		$		$		$		$
1/1/20
1/1/21
1/1/22
1/1/23

Lease Expense Schedule
Date		Lease Expense (Straight-Line)		Interest on Lease Liability		Amortization of ROU Asset		Carrying Value of ROU Asset
1/1/20		$		$		$		$
12/31/20
12/31/21
12/31/22
12/31/23

Determine the nature of the lease to both Ayayai and Kingbird. The lease is a/an lease to Ayayai. The lease is a/an lease to Kingbird. Prepare the journal entries for Kingbird for 2020 and 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the lease)